Chapter 4 Assignment Solution

School: California Polytechnic State University, Pomona - Course: ACC 3110 - Subject: Accounting

Exercise 4-1 (30 minutes) Note: The original missing numbers are blocked and shaded. (a)(b)(c)(d)(e) Sales............................. $62,000$43,500$55,000$79,000$25,600 Cost of goods sold Merch. inv., beg..........8,00017,0507,5008,0004,560 Total cost of merch. purchases.................38,0001,95043,75032,0006,600 Merch. inv., end..........11,9503,0009,0006,6004,160 Cost of goods sold.....34,05016,00042,25033,4007,000 Gross profit..................27,95027,50012,75045,60018,600 Expenses......................10,00010,65012,1503,6006,000 Net income (loss)........$17,950$16,850$ 600$42,000$12,600 Explanations: a. Find merchandise inventory (ending) by subtracting cost of goods sold from goods available for sale. Find gross profit as the difference between the sales and cost of goods sold. Find net income as the gross profit less the expenses. b. Find total cost of merchandise purchases by finding the number that makes the total equal the cost of goods sold. Find gross profit from sales less cost of goods sold. c. Find cost of goods sold from sales less gross profit. Find cost of merchandise purchases by finding the number to make the calculation equal cost of goods sold. d. Calculate cost of goods sold as usual. Calculate sales as gross profit plus cost of goods sold. e. Find merchandise inventory (ending) by subtracting cost of goods sold from goods available for sale. Find gross profit from sales less cost of goods sold. Find net income as gross profit less expenses.

Exercise4-3 (30 minutes) Apr. 2Merchandise Inventory......................................4,600 Accounts Payable—Lyon..........................4,600 Purchased merchandise on credit. 3Merchandise Inventory......................................300 Cash.............................................................300 Paid shipping charges on merchandise. 4Accounts Payable—Lyon..................................600 Merchandise Inventory..............................600 Returned unacceptable merchandise. 17Accounts Payable—Lyon..................................4,000 Merchandise Inventory..............................80 Cash*...........................................................3,920 Paid within discount period less returns. *($4,600 - $600) x (100% - 2%) 18Merchandise Inventory .....................................8,500 Accounts Payable—Frist...........................8,500 Purchased merchandise on credit. 21Accounts Payable—Frist..................................500 Merchandise Inventory .............................500 Received an allowance on purchases. 28Accounts Payable—Frist..................................8,000 Merchandise Inventory..............................80 Cash*...........................................................7,920